Glitnir A focused and well positioned Nordic Bank Lárus Welding – CEO March 13 2008 Executive Summary Strong and sustainable business model
Sound revenue High proportion of core income (90% in 2007) mix Diversified revenue mix, both by type and geography
Strong Nordic Full banking and integrated service offering in home markets platform Iceland and Norway Advisory and asset management service offering across the Nordics supported by no. 2 equity broker position in the region
Unique position Leading global player in Seafood and Geothermal Energy in Niches Strong player in the Norwegian Offshore Service Vessel market
High asset quality Diversified well collateralized loan portfolio No sub-prime exposure
Favorable Norway and Iceland are two of the world’s wealthiest economies underlying Dependence on strong sectors such as energy, seafood, country risk aluminium and tourism 2 Clear Vision
3 The Journey – Built on Nordic Heritage Well positioned for further international growth
1904 – 1997 1998 – 2007 Next five years s
t Universal banking service offering Strong organic growth outside Iceland Strong Nordic Corporate Bank providing n integrated solutions backed by
e Foundation for Niche expertise Offices in: c i Corporate Finance and Capital Markets
m established
n Luxembourg, London, Copenhagen, p a Shanghai, Halifax & New York Global leader in Seafood & Sustainable o g l
r Energy
e Becoming Glitnir O v e d
Universal Banking International Future in Iceland Expansion Vision s t
n c
i e Domestic consolidator in the financial Kreditbanken, Norway (2004) Bolt-on acquisitions supporting the g
m sector BNbank, Norway (2005) strategy & Vision e t p a
o Norse Securities, Norway (2006) l r t e Fischer Partners, Sweden (2006) S v
e FIM, Finland and Russia (2007) d
Assets : ISK 89.5 bn1) Assets : ISK 2,948.9 bn 2) PBT : ISK 1.1 bn1) PBT : ISK 33.9 mm2)
Note: 1. End of 1997 Note: 2. End of 2007 4 Nordic Player with International Reach ...and a global platform and client base in target niches
Glitnir Offices Seafood Sustainable Energy Offshore Service Vessels
Services provided to Nordic and Niche clients Globally
Corporate Banking Investment Banking Capital Markets 5 Successful Niche Strategy
Successful Concept Niche Loan Portfolio (2005-2007)
Industry background and heritage in home markets 300 14%
Dedicated teams of industry experts, academics & professionals serving clients globally 200 12% n b
Partnerships with industry associations and networks K S I 100 10% Global Niche research and conferences
Niche strategy serves as a spearhead for origination of 0 8% corporate lending, advisory and client relations 2005 2006 2007
internationally Niches % of total loan portfolio
Increased emphasis on niche activities Niches Loan Portfolio 2007 Integrated service offering to niche clients Sustainable Energy Well- positioned in growth industries 10% Seafood: Long-standing position Sustainable Energy: Unique position in booming Offshore industry Service Offshore Service Vessels: Local niche in 28% Seafood Norway, the leading global OSV hub 62% Break-through year in niche transactions, 42% of 2007 CF advisory fees from niche- related activities 6 Seafood & Glitnir
Glitnir Value Proposition Global top 12 Suppliers of Seafood 2005
Icelandic and Norwegian seafood industry heritage 70.0 Capture Aquaculture Seafood teams located in 6 countries providing 60.0 50.0
extensive geographical coverage and global research T M 40.0 on the industry n o i l
l 30.0 i Glitnir has unique access to strategic partners and key M 20.0 corporate players in the global seafood industry. 10.0 0.0
e d
Of today’s top 100 seafood companies, Glitnir has 46% a n A a u a y d a l i m r i i S n n a d a n i s d a e h a p U a a l h e w n n l P i C a n
as clients, and 68% either as clients or ongoing I r t n C e J a a o e o c h i I C N d relationships T V Source: FAO FIGIS Databasen 2007 I Fisheries Production and World Population Selected Glitnir Customers
250.0 9 Aquaculture 8 Captured fisheries 200.0 7 P
World Population o 6 p u s l n 150.0 a o t i T
5 o
n n
o ( i b l 4 l i i l
100.0 l i M o
3 n )
50.0 2 1
0 0 7 Source: FAO 1970 1980 1990 2000 2010 2020 2030 Sustainable Energy & Glitnir
Glitnir Value Proposition U.S. Geoth. Installed Cap. Estimates (MW)
16,000 Iceland & Norway with < 99% of electricity production 14,000 from renewables (~9% in the United States), Iceland (Additional) Resource Estimates 12,000 Projects in Development being one of the leaders of geothermal energy utilisation Current Installed Capacity 10,000 12,558 Focused team of industry experts providing extensive 8,000
global research and full range of financial services 6,000 5,588 2,916 4,000 Strong position among strategic partners and key 2,000 2,851 2,851 2,851 2,851
corporate players in the global Geothermal industry 0 Current Projected 2015 2025 Glitnir has client relationships with players representing Estimate Estimate Source: Geothermal Energy Association, “Update on US Geothermal Power Production 10% of the world geothermal production and Development, May 10, 2007”; WGA, Geothermal Task Force Report January 2006 GeothInstalled. Capacity Electricity today 9,000 Capacity MW, potential and150,000 Potential MW Selected Glitnir Customers
8 Source: Bertani, R. “What is Geothermal Potential”, International Geothermal Association, Glitnir Research ] Strong and well positioned
9 Strong business model
Core income up 20.6% in 2007 Core income development
90 Sustainability of core income strong 80 70 Net interest income stable 60 n
b 50
K
S 40 I Fee and commissions sustainable 30 20 Other income less than 10% 10 0 Q107 Q207 Q307 Q407 2007 Cost cutting potential Net Interest Income Net Fees & Comissions 3.5 bn one off costs in 2007 Cost development
Good asset quality 60 50 Focus on balance sheet management 40 n b
K 30 S I 20
10
0 Q107 Q207 Q307 Q407 2007 10 Stable Net Interest Income
Stable contribution from solid loan book NII by regions 2007
International 2.0 Loan book grew 24% in 2007 Nordic 8.3 Growth in NII estimated above 10% Iceland in 2008 even without increase in the 18.2 loan book The loan book is hedged* with Europe regard to duration and currency 10.5 Total ISK 39.1 bn NII by regions Increased funding cost should
n 12
b 0,6
therefore not materially affecting K S I 10 2,3 0,4 0,5 margin on existing portfolio 2,0 8 0,4 2,3 0,8 3,5 1,7 6 2,0 2,1 3,0 2,0 4 2,0 5,2 5,5 2 3,8 3,7 2,8 0 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
* With the exception of the CAD equity currency hedge and a long position in ISK inflation Iceland Europe Nordic International 11 Sustainable Net Fees and Commissions
Strong foundation for resilient NF&C NF&C by business lines 2007** Capital Markets built on Equity, FX and Retail Banking Investment 4,4 bond trading volumes Management 8,6 Corporate Banking Corporate Finance Advisory with 43% of 2,9 fees from niche related business Investment Banking Investment Management stable with 6,2 substantial growth and cross selling Markets 17,2 potential Total ISK 37.6 bn Glitnir is the no. 2 equity broker in Nordics* NF&C by regions 2007** OMX & OSE International )
n 2,000 8%
b Europe 0.8 7% K M 3.0 S
I 1,500 6% a ( r
k r
5% e e t v
o 1,000 4% S n h r a
u 3% r T
e Iceland
r 500 2% i
n 18.1 t
i 1% l
G 0 0% Nordic Jan March May July Sept Nov Jan 15.7 Turnover Market Share 12 * Equity brokerage by turnover on OMX+OSE from January 2007 to January 2008 ** Excluding Treasury and Other -1.6 bn Total ISK 37.6 bn Profit Before Tax Growing contribution from non-Icelandic operations
PBT 2007 by regions PBT 2007 by business lines*
International Investment Corporate 6% Management Banking Total ISK 33.9 bn 1.5 12.7 Europe 23% Retail Banking 5.0 Iceland 48%
Investment Matkets Banking Nordic 7.2 8.1 23%
50 n b 50 n K b
S 40
I
K 40 S I 30 30 20 20 10 10 0 (10) 0 2005 2006 2007 2005 2006 2007 Iceland Nordic Europe International Corporate Banking Investment Banking Markets Retail Banking Investment Management Treasury & Other 13 *Chart excludes Treasury and Other -0.6 bn Well diversified funding mix
Successful funding operations in 2007 Redemption profile (consolidated)
Long-term funding equivalent to EUR 6.45 bn 7,000
during 2007 6,000
Large part of parent’s funding executed in the 5,000 first half of 2007
m 4,000
R U
Well spread maturity profile E 3,000 Liquidity postion is comfortable with EUR 7 2,000 billion immediate available funds with 1,000
maturing long term debt of EUR 2.5 billion for 0 the group due for the remainder of 2008 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Funding done - Consolidated Refinancing need - Consolidated Consolidated funding mix Distribution of LT debt investors (cons.)
FI deposits 2% France Japan 2% Austria 2% Australia Switzerland 2% 2% Deposits 28% GMTN 29% 4% USA Italy 21% 6% Iceland Subordinated US MTN 8% loans 4% 7% Other AUD MTN 1% Norway Other 9% 17% borrowings International Norwegian 14% loan markets UK & Germany bond markets 5% Ireland 16% 9% 12% 14 Glitnir is fundamentally well positioned In Home Markets and Internationally HOME MARKETS Norway and Iceland are two of the world’s wealthiest economies Main dependence on strong sectors such as energy, seafood, aluminium and tourism Ability to effect GDP development by increasing utilization of energy sources INTERNATIONAL Seafood and Sustainable Energy Increased focus on Niches in the current market Loans to Niches have higher margins than the average portfolio Strong advisory business related to niches Niches provide a unique deal flow to Glitnir’s equity investments team
15 Appendix
16 Key Financial Ratios
2004 2005 2006 2007 CAD ratio (end of period) 12,6% 12,6% 15,0% 11,2% Tier 1 capital (end of period) 9,4% 9,9% 10,8% 8,1% Return on equity after taxes 40,0% 30,3% 39,4% 19,3% Earnings per share (ISK) 1,13 1,48 2,68 1,86 Average number of full-time employees 1.126 1.216 1.392 1.977 Net interest margin 2,7% 1,9% 2,0% 1,6% Cost/income ratio 49% 36% 38% 57% Impairment losses - as a proportion of average total assets 0,6% 0,2% 0,3% 0,2% - as a proportion of loans and guarantees 0,7% 0,2% 0,3% 0,2% Share price (end of period) 11,2 17,3 23,3 22,0 Price/earnings (end of period) 9,5 11,7 8,7 11,7 Dividend per share 0,35 0,38 0,66 0,37 Pay-out ratio 29,7% 25,7% 24,6% 20,0% Outstanding shares (end of period) 11.081 13.112 14.161 14.729 Share price/book value (end of period) 2,56 2,68 2,26 1,90 Market Capital (ISK bn end of period) 124.107 226.838 329.951 323.302 17 Key Ratios
CAD ratio EPS ROE
1.00 50% 16% 15.0% 14.2% 13.2% 40% 4.2% 2.6% 11.7% 11.2% 0.75 12% 3.8% 30%
3.2% 3.1% K S
I 0.50 8% 20% 43.6% 11.6% 29.8% 10.8% 9.4% 0.64 0.66 26.9% 4% 8.5% 8.1% 0.25 0.46 0.55 10% 20.5% 0.19 7.1% 0% 0.00 0% Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Tier 1 Tier 2
Market Capitalization P/E P/B
500 20.0 5.0 4.0 400 15.0
n 3.0 o
i 300 l l
i 10.0 b 200 398 419 418 2.0 K 330 323 11.70 12.03 12.12 11.7 2.76 S 2.60 2.48 I 5.0 1.0 2.26 100 8.63 1.9 0.0 0 0.0 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07
18 www.glitnirbank.com
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